How Vietnam, Indonesia, and Thailand Are Tackling Trade Tensions: A Country-by-Country Breakdown
As global protectionism picks up pace, Southeast Asia is not standing still. Instead of bracing for impact, countries like Vietnam, Indonesia, and Thailand are moving swiftly to secure their export-driven economies. With tariffs shifting trade dynamics at the highest level, each of these markets is now scripting its own response—diplomatic, strategic, and financial.
At EBC Financial Group, we’ve been closely analysing how these economies are recalibrating. The result? A story not of retreat, but of realignment.
Vietnam: Fast Reforms, Faster Deals
Vietnam has long been a standout in the region for its export-led growth, and recent events have only accelerated its urgency to preserve access to US markets.
Facing tariffs as high as 20% on key goods like electronics, furniture, and textiles—with base rates on electronics at 10% and wood products at 15%—Hanoi is pressing ahead with a bilateral agreement aimed at mitigating the fallout. Earlier proposals had threatened tariffs of up to 46%, underscoring the scope of Vietnam’s diplomatic efforts.
In tandem, policymakers are enacting support packages for exposed industries and pushing reform signals to reassure global investors. The strategy is working. As David Barrett, CEO of EBC Financial Group (UK) Ltd, puts it: “Vietnam's ability to pivot quickly and preserve market access speaks to its growing strategic importance in global supply chains.”
Confidence is also translating into markets. A recent report from Vietnam Investment Review confirms that optimism around trade prospects has already boosted local equities.
Indonesia: Playing Offence with a USD34 Billion Offer
Jakarta isn’t waiting to be cornered. It has responded to tariff pressure with a pre-emptive package—USD34 billion worth of trade proposals now on Washington’s table. The move reflects a desire to secure favourable treatment for key export sectors such as palm oil, rubber, and apparel.
The results are already tangible. Indonesia successfully negotiated a reduction in tariffs from 32% to 19% on priority goods, offering a buffer to domestic producers who were bracing for impact.
This calculated diplomacy isn’t just about shielding short-term profits. It’s about positioning Indonesia as a serious and engaged trade partner. As we see it, this puts the country in a stronger spot when negotiating future deals—not just with the US, but globally.
Thailand: Racing Against Time to Save Core Sectors
Thailand, in contrast, is already contending with tariffs imposed in April and is now pushing to reduce existing rates—especially on autos and electronics, two of its most critical export verticals.
Negotiations are ongoing, but delays could cost. Export orders are already under review, and investor sentiment hinges on Bangkok’s ability to secure a new deal. Bloomberg reports indicate that the current 36% tariff on some goods is a sticking point, and Thailand’s urgency reflects just how consequential this number is for its manufacturing base.
We believe Thailand’s ability to move quickly—without compromising long-term goals—will determine how its exporters fare over the next quarter.
The Bigger Picture: Spillover Risks Across ASEAN
While Vietnam, Indonesia, and Thailand are in the spotlight, the rest of ASEAN is not insulated. Malaysia and Singapore, though less directly impacted, face real risks from regional spillovers.
Singapore’s highly open economy remains vulnerable to declining demand in neighbouring countries. Malaysia, deeply embedded in upstream component production, could find its exports indirectly caught in tariff crossfire.
As Barrett noted, “The ripple effects of US tariff action are already being felt across ASEAN. Whether it's direct exposure or indirect fallout, the urgency to adapt is very real.”
Currency Movements Signal Diverging Paths
FX markets across the region have already started reflecting the pressure. Vietnam’s dong and Thailand’s baht have remained relatively resilient, aided by diplomatic momentum and central bank readiness. Indonesia’s rupiah, however, continues to face selling pressure as policymakers juggle between supporting the currency and maintaining capital inflows.
Meanwhile, the Singapore dollar has edged lower, a reflection of its sensitivity to global demand shifts. In our assessment, these divergences in currency performance mirror the underlying strategies and exposure levels of each country.
What It Means for Traders
From an EBC perspective, these developments open up multiple trading avenues.
Currency pairs tied to emerging Asia are likely to see more volatility. Traders should pay particular attention to the rupiah and dong, where policy and diplomacy may swing sentiment rapidly.
Sector-specific equities—especially those in tech hardware, automotive, and textiles—could also be revalued depending on tariff relief or pressure. Government bond yields in Indonesia and Thailand are already inching upward, pricing in policy uncertainty.
For those trading FX, rates, or commodities, the key will be responsiveness to both policy shifts and macro narratives.
Final Thoughts
“Southeast Asia isn't just reacting—it’s repositioning,” Barrett concluded. “From Vietnam's reform drive to Indonesia's pre-emptive diplomacy, the region is leveraging trade friction as a catalyst for economic recalibration. For investors and traders alike, this is not a story of decoupling—it’s a story of divergence.”
At EBC, we remain committed to decoding these regional shifts and providing insights that help our clients stay ahead of the curve.
Disclaimer: This article reflects the observations of EBC Financial Group and all its global entities. It is not financial or investment advice. Trading in commodities and foreign exchange (FX) involves significant risk of loss, potentially exceeding your initial investment. Consult a qualified financial adviser before making any trading or investment decisions, as EBC Financial Group and its entities are not liable for any damages arising from reliance on this information.
Disclaimer:
Investment involves risk. The content of this report is not an investment advice and does not constitute any offer or solicitation to offer or recommendation of any investment product.
Publication date:
2025-07-29 05:48:53 (GMT)
